Question for business / tax / atty's

[Brian in VA]

What says the brain trust on this? I've been doing some training and getting paid on the side for that lately. One of my partners was suggesting I get an LLC (or similar) for tax reasons and keep it all separate from my salary & normal income. We're talking only about $1k a month or so, so is doing that going to be worthwhile?

[RWebb]

how hard is it to set one up in your Dominion?

[id10t]

Any single entity that gives you $$ is going to have to document it on its books and is going to report that they've paid you X amount in dollars as a contract employee. Or you'll have to "sell" them something, so it is still accounted for but in a different way.

Either claim it on your taxes from a 1099 or create a LLC or S-Corp and funnel the money thru that.

[Brian in VA]

It looks fairly easy to set up an LLC (a few forms) but yearly fees etc. Is there a big benefit in funneling the money thru an LLC v just filing it on a 1099?

[Esel Mann]

I suggest you find a reputable accountant in your area, and pay for an hour's worth of advice. We certainly are not aware of all your details. LLC's, S-Corps, or straight 1099. They each have a purpose. There are +/-'s to each. To try to steer you one way or the other may wind up not so good for you. Additionally how each is treated can vary state to state.

The accountant will be able to ask enough key questions to figure out what will be to your advantage.

[Gogar]

Do you have another job with a W-2, etc?

You can alternatively do a "schedule C - profit or loss from business" as an addendum to your tax return, and claim expenses, depreciate equipment, etc. I think LLC is a separate return, but that's not really a big deal either.

The schedule C and your straight W-2 job can interact with each other in ways that can be beneficial to you if you have a savvy acct.

[Brian in VA]

OK thanks. I've got a good acct so looks like my next move is to get in touch with him.

[Eric Coffey]

Originally Posted by Brian in VA

It looks fairly easy to set up an LLC (a few forms) but yearly fees etc. Is there a big benefit in funneling the money thru an LLC v just filing it on a 1099?

Depending on your specific situation, an LLC (or LLC owned by an S-corp, etc.) might be worthwhile. Another benefit is asset protection and/or liability/loss mitigation. Although it doesn't take much to "pierce the corporate veil" these days, it can be a good insulator. You just have to make sure that if you set one up, you operate it as a business and keep everything separate from your "non-business" affairs/accounts/etc. Not rocket surgery, but takes a little more forethought/planning in some instances than others.

[jwasbury]

Originally Posted by Brian in VA

It looks fairly easy to set up an LLC (a few forms) but yearly fees etc. Is there a big benefit in funneling the money thru an LLC v just filing it on a 1099?

All else being equal there is no tax benefit to funnelling through an LLC. The default tax status of a single-member is = sole proprietorship. You would file Schedule C attached to your Form 1040. With an S-Corp you could potentially achieve a small tax benefit, but for 1k per month, probably not worth the administrative burden and cost of maintaining the legal entity IMHO.

[Brian in VA]

Jwasbury, thanks that was what I was wondering, if it could possibly be worthwhile. I had a feeling that with that little income for it it would not be worth the time & hassle. Well, thanks again.